Practice Areas

U.S. to Suspend AGOA Benefits for South African Farm Goods in 60 Days

Tuesday, November 10, 2015

Sandler, Travis & Rosenberg Trade Report

President Obama notified Congress Nov. 5 of his intent to suspend duty-free treatment under the African Growth and Opportunity Act for all eligible goods in the agricultural sector from South Africa as of Jan. 4, 2016. U.S. Trade Representative Mike Froman noted that South Africa could still avoid this suspension if it meets “mutually-agreed benchmarks relating to eliminating barriers to U.S. poultry, pork and beef.” South African Minister of Trade and Industry Rob Davies said he believes this will be achieved within the 60-day period and that his country remains “fully committed to address any final technical matters that the United States may require in making sure that the country continues to benefit from AGOA.”

The president said he is taking this step “because South Africa continues to impose several longstanding barriers to U.S. trade, including barriers affecting certain U.S. agricultural exports,” and is thus “not making continual progress toward the elimination of barriers to United States trade and investment as required by section 104 of AGOA.” He added that he chose this measure rather than terminating South Africa’s designation as an AGOA beneficiary completely because he believes it would “better promote continuing efforts … to resolve these outstanding issues,” acknowledging that South Africa “continues to express an interest in resolving U.S. concerns.”

The president’s decision came after USTR conducted an out-of-cycle review of South Africa’s eligibility to receive AGOA benefits. That review focused on whether South Africa (a) is living up to a June agreement to allow imports of up to 65,000 metric tons of U.S. bone-in chicken without the 100 percent antidumping duty that has been in effect since 2000 and (b) is moving to lift what USTR called “unwarranted sanitary restrictions” on imports of U.S. poultry, beef and pork, including measures imposed last year after an outbreak of avian influenza. USTR states that in the context of this review South Africa “committed to benchmarks on poultry, pork, and beef that it would need to meet in order to demonstrate compliance with AGOA’s eligibility requirements.” However, USTR adds, South Africa failed to meet Oct. 15 benchmarks related to U.S. poultry, prompting the president’s announcement.

South Africa responded that it issued a draft regulation on the poultry quota on Oct. 31 and expects the process of creating this quota to be concluded “well before” Dec. 31. In addition, “work is almost complete” on the drafting of the necessary trade and animal health protocols for poultry, beef and pork, which has taken time because “a balance has to be found between trade opening and animal health.”